This week in oil news

This week in oil news

September 28, 2015 – Long Island, NY – Oil prices have remained low for weeks, and it can be assumed now with a great certainty, that it won’t change much during the upcoming winter season. Even a short-term boom of heating oil options prices from late August did not sustain. Low demand for crude oil worldwide, combined with ever-increasing output keeps the oil consumer budgets safe for now, and it will stay this way for some time in the future, as well. Currently, average oil heat price per gallon in Long Island region is around $2.56, down by 31.9% on the same day in 2014, according to NYSERDA. The actual number is much lower, around $1.85/g for COD deliveries.

China’s slow growth, and period of economic stagnation, crowned by the Fed’s decision not to increase the interest rate for the dollar all have an appalling effect on oil. On the other hand, there is virtually nothing that can push the oil prices up. Even the US car sales figures are a bit down, for the first time in the last 19 months. For a continuously high oil price it takes a long run of consistent worldwide economic growth, primarily in the developed parts of it, such as North America and Europe

The dollar, which has a counter-proportional influence on the oil price, remained strong despite the Fed decision not to hike interest rates. This may be more due to weakness of major European economies, rather than strength of trade within the US. The European Union is going to handle several geopolitical challenges, including the Syrian refugee crisis, secessionism in Spain and a still unsolved fate of Greek economy and the euro, which all combined may push the vulnerable EU’s economy back to recession.

This Monday’s meeting of President Obama with his Russian colleague Vladimir Putin would possibly result in warming up the West-Russia relations, with finding a more effective solution for the ongoing Syrian Civil War, which has a certain impact on Middle Eastern rig count and future output of crude oil. If an agreement with Russia is found over a short term, this would definitely stop oil prices from further drowning and reaching a point which major oil companies would consider break-even. The Islamic State, which is the major source of worry, will not likely be able to finance itself through 2016 which would lead to its collapse. Without a war around Syria and Iraq, more wells will be secure, distribution of oil would be easier and the world’s economic growth would be higher. However, those will have a minute impact on heating oil price. Heating oil is mostly made of domestic crude. Major short term factor which can lead to shocking, but short term price rises are severe weather events, but they’re unlikely to happen as the East Coast is experiencing a very warm and dry September, which does not seem to come to an end in the following at least two weeks. There are also estimations that winter in the Northwest may be warmer than last year, which would allow consumers use less heating oil.